Crypto REPOs operate similarly to a fully collateralized “Repurchase Agreement” in Equities or Fixed Income instruments.
One BUYs and SELLs a Currency pair at the same time on 2 different value dates. The Near_Leg being immediately settled (Intra-day repo) or today at EoD, the second either Tomorrow 5pm NY, one or 2 weeks ahead.
Crypto REPOs operate similarly to a fully collateralized “Repurchase Agreement” in Equities or Fixed Income instruments. One BUYs and SELLs an Instrument at the same time on 2 different value dates. The Near_Leg being immediately settled (Intra-day repo) or today at EoD, the second either Tomorrow 5pm NY, one or 2 weeks ahead. This trade unwinds itself with a pre-agreed price difference (REPO traded price) which equates to an interest payment.
Why use REPO/Lend
An exchange user who possesses unused inventory of Crypto or Fiat may want to capture yield by lending it to the market. By offering one’s unused balances on XCDE, an anonymous market counterparty can borrow and pay an interest in the form of a “BUY/SELL” price difference.
With a Crypto REPO, users can borrow, lend or rollover their leveraged positions against anonymous counterparties. FXCH clearing mitigates risks by supervising collateral from all parties and simplify the settlements.
Instruments
Instruments on REPO/Lend are described with 3 parts:
Underlying Instrument: (BTC/USD Spot, ETH/USDT Spot eyc.)
Tenor: (ON, 2w, ID etc.)
Type: (REPO)
Example Instruments:
BTC/USD-1w-R = BTC/USD One week Repo
ETH/USDT-ID-R = XRP/USDT Intra-day Repo
Instrument components:
BTC/USD-1w-R
Near_Leg = BTC/USD-Spot (settlement today 5pm NY)
Far_Leg = BTC/USD 1 Week Forward (settlement one week later at 5pm NY)
This is an example for a 1 Week REPO:
BRW needs 100 BTC, and has USD.
LND has 100 BTC and is happy to lend
BTC/USD Market price today 7th Dec 2022 = 17,000.00
Let’s take the lending rates below (as shown today on BitFinex):
BTC: 4.00% (for info, USD: 6.00%)
We convert these rates in “Price” the following way…
Per year (17,000/100)*4=680.00
For 1 week => (680.00/365)*7=13.0410
So the Swap trade would be:
Near_Leg: BRW BUY 100 BTC/USD @ 17000.00 TOD (settled today at 5pm NY)
Far_Leg : BRW SELL 100 BTC/USD @ 16986.96 1w (settled on March 5th at 5pm NY)
API connectivity
XCDE has operated REPO/Lend for over 2 years in a Web-only form, but recently decided to release access to the market via API.
Our choice is a set of REST and Websocket end-points replicating the battle-tested FIX protocol messages and workflows.
Please register and get in touch if you are interested to explore and test these End-points with your trading app.
REPO/Lend API documentation